The demand for liquefied natural gas (LNG) and liquefied petroleum gas (LPG) is expected to grow in 2024 and reach All time High demand by 2030, driven by factors such as the increasing adoption of LPG by domestic end-users, the growth of the automotive industry, and the rising focus on reducing greenhouse gas emissions.
TheSeaholic is a Sea, Ships & Marine Industry related blog and so I thought why not write a Post about Best LPG, LNG Gas Stocks in India to Invest. International LPG, LNG Stocks are available here.
Although every investor has been sleeping with one eye open for new-age sectors that could give them multi-bagger returns, an industry like gas distribution also shows tremendous potential. Surprisingly, the city gas distribution market in India is expected to grow at a CAGR of 10%.
This would mean that the market would grow from 9,223 MMSCM (Million Metric Standard Cubic Meter) in 2020 to 25,570 MMSCM by 2030.
The cause of this has been the increased demand for the use of natural gas for automotive, industrial, commercial, and for residential purposes. If we take a look at data from 2019, the City Gas Distribution market was dominated by CNG sales.
Top LPG, LNG Gas Distribution Stocks In India
1. Indraprastha Gas Limited (IGL)
Indraprastha Gas Limited (IGL) is an Indian natural gas distribution company that supplies natural gas as cooking and vehicular fuel, primarily in Delhi NCR. Established in 1998, the company is a joint venture between GAIL, Bharat Petroleum, and the Government of Delhi.Â
IGL supplies piped natural gas to over 9,00,000 homes, over 2,000 commercial and more than 1,150 industrial establishments in the NCR. It also operates 425 CNG filling stations for natural gas vehicles.
2. GAIL India Ltd
GAIL (India) Limited is a natural gas processing and distribution company based in India. It was established in 1984 as a Central Public Sector Undertaking (PSU) under the Ministry of Petroleum & Natural Gas (MoP&NG).Â
The company has a significant presence in natural gas transmission, marketing, and processing, LPG production, transmission, and marketing, petrochemicals, city gas distribution, and exploration and production through participation in equity and joint ventures. GAIL supplies natural gas to various sectors, including power, fertilizer production, and city gas distribution.Â
The company has a total installed capacity of 130.26 MW of alternative energy, out of which 118 MW are wind energy projects and 12.26 MW are solar energy projects. As of 2023, GAIL has a market capitalization of ₹1,19,963 crore and is one of the seven Maharatna Public Sector Undertakings (PSUs) under the Government of India.
Also Read, Top 5 Biggest LNG Ships in the World
3. Mahanagar Gas Limited (MGL)
Mahanagar Gas Limited (MGL) is a natural gas distribution company that supplies natural gas as cooking and vehicular fuel, primarily in Mumbai and its adjoining areas. Established in 1995, the company is a joint venture between GAIL and BG Group.Â
MGL supplies piped natural gas to over 1.2 million households, over 4,000 commercial and more than 1,000 industrial establishments in Mumbai and its adjoining areas. It also operates over 200 CNG filling stations for natural gas vehicles.
4. Gujarat Gas Ltd
Gujarat Gas Limited (GGL) is an Indian natural gas distribution company, owned by Gujarat State Petroleum Corporation (GSPC). Founded in 1980, the company is headquartered in Ahmedabad and serves primarily in Gujarat, where it is India’s largest city gas distribution (CGD) company.Â
As of 2023, Gujarat Gas Limited had operations in 649 human settlements in 19 districts of Gujarat and the Union Territory of Dadra and Nagar Haveli and Thane GA (including Palghar district) of Maharashtra. The company has a large customer base consisting of 10,80,000 domestic households, 2,835 industrial customers, and 11,900 commercial and non-commercial customers.Â
5. Adani Total Gas Ltd
Adani Total Gas Ltd (ATGL) is an Indian company that produces and distributes natural gas, offering industrial and compressed natural gas (CNG) to commercial, residential, and transport sectors in India.Â
Founded in 2004, Adani Total Gas Ltd. is engaged in city gas distribution and is part of the famed Adani Group. The company supplies Piped Natural Gas(PNG) to industrial, Commercial, Domestic (residential), and Compressed Natural Gas (CNG) to the transport sector.
The company operates in the cities of Ahmedabad and Vadodara in Gujarat, Faridabad in Haryana and Khurja in Uttar Pradesh.
Adani Total won gas distribution rights for the cities of Allahabad, Chandigarh, Ernakulam, Panipat, Daman, Dharwad, and Udhamsingh Nagar along with Indian Oil Corporation.
The company is committed to providing piped natural gas and compressed natural gas to fuel vehicular movement critical for the delivery of essentials and ensure the availability of healthy cooking gas amid the global crisis. Adani Total Gas also provides online services for bill payment and account management, allowing customers to pay their bills through various online channels
6. Petronet LNG Ltd
Petronet LNG Limited is an Indian oil and gas company established by the Government of India to import liquified natural gas (LNG) and operate LNG terminals within the country.
Founded as a joint venture between GAIL, ONGC, IOCL, and BPCL, it operates two major LNG terminals—one in Dahej, Gujarat, with a capacity of 17.5 million tons per year, and another in Kochi, Kerala, with a capacity of 5 million tons per year.
The company aims to become a significant energy provider through its unique position in the LNG value chain, both domestically and internationally.
Factors to consider before Investing in LPG and LNG Gas stocks
Investing in gas stocks in 2024 comes with both potential rewards and significant risks. Before making any decisions, it’s crucial to carefully consider various factors:
Market trends and volatility:
- Oil and gas prices: These are highly volatile and influenced by geopolitical events, supply-demand dynamics, and global economic conditions. A sudden price drop could significantly impact stock prices.
- Energy transition: The growing focus on renewable energy poses a long-term threat to the gas industry. Consider the company’s plans and investments in clean energy alternatives.
- Regulations: Governments are increasingly implementing stricter environmental regulations. Understand how these regulations might affect the company’s operations and costs.
Company-specific factors:
- Financial health: Analyze the company’s debt levels, cash flow, profitability, and dividend history. Seek companies with strong fundamentals and a sustainable financial position.
- Exploration and production: Evaluate the company’s exploration success rate, reserves, and production costs. Understand their geographical diversification and potential risks associated with specific regions.
- Management team: Research the experience and track record of the management team. Assess their ability to navigate market challenges and capitalize on opportunities.
Investment goals and risk tolerance:
- Investment horizon: Are you looking for short-term gains or long-term value appreciation? Gas stocks can be volatile in the short term but may offer potential growth over the long run.
- Risk tolerance: Can you withstand significant price fluctuations? Gas stocks are inherently riskier than some other sectors. Only invest what you can afford to lose.
Additional considerations:
- ESG factors: If you prioritize environmental, social, and governance (ESG) principles, consider the company’s sustainability practices and commitment to responsible operations.
- Diversification: Don’t put all your eggs in one basket. Diversify your portfolio across different sectors and asset classes to mitigate risk.
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Disclaimer: Investing in the market carries inherent risks, including the potential for loss of capital. It is important to conduct thorough research and consider seeking advice from a financial professional before making any investment decisions.